ExxonMobil transportation demand forecast

Despite the large increase in personal vehicles in Exxon’s forecast, Exxon expects the major growth in transportation demand to come from commercial activity – from air travel to shipments by boat, train, or truck of raw materials, building supplies, food products, appliances, and other consumer goods. Global energy demand for transportation is projected to increase by 40% from 2010 to 2040, differing widely in amount by country.

The expected expansion of the world’s middle class and other factors like population growth result in a large increase in the world’s light duty vehicles, which are expected to more than double, from approximately 825 million in 2010 to approximately 1.7 billion in 2040 – more than a 100% increase. Because cars are expected to become more fuel efficient, global energy demand for light duty vehicles is expected to change very little – the only major transportation subsector in which energy demand is not expected to increase significantly through 2040.

Exxon expects global light duty demand to peak around 2020, at approximately 23 million boe/d. Approximately 85% of the growth in the global fleet through 2040 is expected to come from developing countries where per capita income is expected to be more than two and a half times the 2010 level. China is expected to account for approximately 40% of the global fleet increase and other developing nations with string fleet growth include India, Brazil, Mexico and Indonesia.

By 2040, China’s light duty vehicle fleet is expected to be approximately 400 million (40% larger than the US fleet) and almost 7 times as large as its fleet in 2010. However, even by 2040, China will likely have only approximately 30 cars for every 100 people, compared to approximately 80 cars per 100 people in the US and approximately 40 per 100 in South Korea. Exxon expects vehicle growth in China and other countries including India, to be somewhat limited by relatively high population density and government policies that encourage public transportation.

Exxon expects fuel economy of the average vehicle on the world’s roads to be 45 miles/gal. in 2040, compared to approximately 25 mpg in 2010 due mainly to improvements to the fuel economy of conventional gasoline and diesel vehicles, which are already benefitting from advances such as boosted – turbocharged – technologies and improved transmission systems. In the US, these boosted vehicles are entering the new car market far more rapidly than hybrids because of their cost/benefit advantages. Hybrid vehicles are projected to grow from 1% of new car sales in 2010 to almost 505 of sales by 2040, making up approximately one third of the global fleet. Hybrid vehicles provide approximately a 30% fuel economy benefit compared to conventional gasoline cars and are expected to become cost competitive by 2025.

Plug-in hybrid and full electric cars are expected to make modest gains, but penetration remains low due to their high cost and functional constraints compared to alternatives. Even though battery costs are likely to fall in coming decades, electric vehicles will continue to face significant challenges as other alternatives also improve. Exxon expects electric vehicles to account for only approximately 5% of the global fleet in 2040. Energy demand for light duty vehicles is expected to increase by only approximately 10% between 2010 and 2025, and then to decline approximately 5% to 2040.